Income Security and Stability During Retirement in Canada

Sébastien LaRochelle-Côté, John Myles and Garnett Picot

Social and Economic Dimensions of an Aging Population Research Papers from McMaster University

Abstract: Post-war policies and subsequent debates had two policy targets: reducing old-age poverty and enhancing income security for the “average worker” after retirement. While we know a lot about the first issue, the second has received less attention as a result of data limitations. We take advantage of unique longitudinal data based on Canadian tax files (the LAD) to examine income replacement rates of older Canadians relative to their economic status when they were in their mid-fifties. In 2005, the replacement income of retired individuals in their mid-seventies who were in the middle of the income distribution at age 55 (in the early 1980s) was between 70 and 80 percent of their previous incomes some 20 years earlier This figure is at the high end of the range (65 to 75 percent) that experts generally consider “adequate” for middle-income retirees to maintain their pre-retirement living standards. However, we also show that there is considerable variation in replacement rates. By age 75, about a quarter of middle-income persons had retirement incomes of less than 60 percent of the income they were receiving in their mid-fifties, a result of differential access to private pension income. We also ask whether income replacement rates have been rising or falling among more recent cohorts of retirees but find little change. Finally, we report results about the stability of incomes in the retirement years. We conclude that year to year instability in family income declines for both high and low income earners as they age, largely because of the stabilizing effect of public pension income sources.

Keywords: retirement; income security (search for similar items in EconPapers)
JEL-codes: D60 D63 H19 H55 I30 J14 J26 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2008-12
New Economics Papers: this item is included in nep-age, nep-his, nep-lab and nep-pub
References: Add references at CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://socserv.mcmaster.ca/sedap/p/sedap236.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://socserv.mcmaster.ca/sedap/p/sedap236.pdf [302 Moved Temporarily]--> https://socialsciences.mcmaster.ca/sedap/p/sedap236.pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mcm:sedapp:236

Access Statistics for this paper

More papers in Social and Economic Dimensions of an Aging Population Research Papers from McMaster University Contact information at EDIRC.
Bibliographic data for series maintained by ().